Summary
The LST/FEI arb rallied into the fortnight on the back of bullish EIA stats but soon retraced from -$195/mt on 28 June to -$210/mt on 02 July. Similarly, the prompt FEI/CP spread had a mixed first week of the last fortnight, ticking up from $50/mt to $52.50/mt by 21 June, before then dropping to a low of $47/mt on 26 June before rallying into the new month.
Open interest across the LPG complex continues to be concentrated in the deferred tenors, with Q4’24 LST/FEI seeing open interest standing at 6.6mb, 115% above the 5-year average of 3mb.
EIA Stats for the week ending 21 June reported a 2.092mb build in US propane and propylene stocks. However, stocks at PADD 3 (US Gulf Coast) only increased by 177kb. In the week ending 28 June, total US stocks rose by 2.3mb. While most of this was still concentrated in PADD 2, PADD 4 saw a significant 897kb build. In addition, exports increased to 1.8mb/d.
Looking at a correlation analysis within the LPG complex, the relationship between FEI and CP propane shifted from negative to positive, while that between LST and FEI grew more negative.
